Boohoo shares drop nearly 7% following news of potential US ban

Boohoo shares plummeted nearly seven per cent yesterday following news that the online giant could face a ban in the US over slave labour allegations.

Boohoo was embroiled in yet another debacle surrounding its labour practices yesterday after a report, first published by Sky News, revealed that the company was now under investigation by the US Customs and Border Protection (CBP).

This sent Boohoo’s shares dropping from 343p to around 320p, before recovering slightly to 332p throughout the day.

The UK’s fastest growing fashion brand, which recently completed an acquisition spree seeing it take on Debenhams and three Arcadia brands, said it was unaware of the investigation when the news broke yesterday.

READ MORE: Boohoo could be banned from the US as “modern slavery” allegations continue

The investigation was launched in response to petitions from lawyer and head of the anti-modern slavery campaign group Liberty Shared, Duncan Jepson, who said the “evidence of Boohoo and forced labour is quite compelling.”

Despite Jepson’s petition, which cited Boohoo’s own supply chain review it commissioned to quell investors’ concerns, analysts believe a US ban is highly unlikely.

Should the CBP decide to block the products, it would give Boohoo three months to provide concrete evidence they were not made with forced labour.

However, establishing the origin of raw materials that regularly pass between borders and various subcontractors is challenging.

The CBP attempted to ban Stevia powder, manufactured by London-listed PureCircle, five years ago after being granted extended powers to tackle enforced labour imports.

Stevia’s ceased shipment was released seven months later after the CBP failed to establish any connection with Chinese labour camps.

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